Cosmo First Q1 FY27 earnings call

Cosmo First reported a robust Q1 FY27 with consolidated sales of ₹1,166 crores, marking a 46% year-on-year growth, primarily driven by a 9% increase in sales volume and effective pass-through of higher raw material prices. EBITDA for the quarter grew 26% YoY to ₹147 crores. However, the EBITDA margin in percentage terms saw a decline to 12.6% from 14.5% in the previous year's corresponding quarter, partly due to increased raw material costs and suppressed export volumes.

The company's B2B segments demonstrated strong momentum and profitability. The Specialty Chemical subsidiary achieved a 34% YoY topline growth, maintaining a healthy 25% EBITDA margin. Cosmo Plastech, the Rigid Packaging vertical, posted an impressive 58% YoY topline growth and successfully turned EBITDA positive with a 7% margin. Management aims for this business to reach ₹150-160 crores in revenue this year and over ₹200 crores next year, targeting a 20%+ ROCE.

Cosmo First continues its strategy of increasing the share of specialty films within its portfolio, with specialty film margins remaining stable at ₹63 per kg. The company launched several new products, including synthetic paper film for high-end digital printing, PVC-free green graphic films, and anti-fog transparent BOPET lidding films. All incremental capital expenditure is directed towards specialty assets, reinforcing the focus on differentiated products and higher-value offerings.

The B2C businesses, Zigly (Petcare) and Cosmo Consumer, are in a growth and investment phase. Zigly recorded a 70% YoY growth, achieving a monthly run rate of ₹100 crores, but its EBITDA loss widened from ₹10 crores to ₹15 crores due to ongoing investments for scaling. Cosmo Consumer also built momentum, launching TV advertisements and expanding its presence in automotive care with its first 4C Cosmo Car Care Centre in Pune. The company expects new businesses to grow 60% overall in FY27.

At the end of June 2026, net debt stood at ₹1,166 crores, translating to a net debt to EBITDA ratio of 2.3x. The company has a clear roadmap to reduce this ratio to below 2x within the next 12 months. Management highlighted a reduction of ₹70 crores in net debt despite an ₹85 crores increase in working capital. They anticipate a further reduction of ₹400-500 crores in debt over the next two years, as the major capex cycle is largely complete.

External factors impacted the quarter, with port congestion leading to a 13% suppression in export volumes and affecting EBITDA. Increased raw material prices contributed to an ₹85 crores rise in working capital. Despite these challenges, the company's gross margin per kg improved across all categories. The US subsidiary received a significant refund of approximately USD 7 million in July 2026, following the reversal of additional customs duties imposed on imports from India.